The Government may revisit caps on banker pay and bonuses at bailed-out lenders if the economic revival continues, according to Bloomberg – which cites two people familiar with the situation.
The Government has limited salaries to €500,000 and banned bonuses at banks rescued by taxpayers during the financial crisis.
While there is no proposal on the table, the policy may be reconsidered should wages across the
economy keep rising, according to one of the people, who declined to be identified because no decision has been made.
One possibility is a tiered system that would allow some lower-paid bankers to receive bonuses, according to one of the people.
Pay and bonuses have been a lightning rod for public anger toward bankers here after billions of euro was spent saving failing lenders.
In May, former finance minister Michael Noonan reiterated that the pay cap remains in place.
This week the Department of Finance said there are no plans "at present" to change current Government policy on banker pay.
The Government granted an exemption to Bank of Ireland so it could pay incoming Chief Executive Officer Francesca McDonagh more than the limit when she joins from HSBC in October.
"The case of the new Bank of Ireland CEO was exceptional and reflected the total compensation package of the retiring CEO, together with the experience and calibre of the successful candidate," the department said.
In addition to the pay cap and ban on incentive-based compensation, Government introduced a levy in 2011 that would result in an aggregate tax rate of 89% on bonus payments of more than €20,000 if they are reintroduced.
Rising pay across the economy might give the Government more political space to ease the restrictions.
Over the last five years, average weekly earnings have risen about 4%, according to the Central Statistics Office.
In the second quarter, pay climbed 2.2% from the year-earlier period.
Some precedent exists for a tiered system.
AIB is awarding staff performance-related pay increases of as much as 3.25%, effective from April 2017 and 2018.
The raise does not apply to the lender’s leadership team, including CEO Bernard Byrne, according to a person familiar with the situation.